Legislation signed into law March 27, 2023, that authorized the Medicaid program expansion in North Carolina also included several significant certificate-of-need (CON) changes. These changes will be phased in over several years. A brief summary is below.
Effective Immediately:
- Removed psychiatric facility, chemical dependency treatment facility and chemical dependency treatment beds from the definition of “Health service facility.” This is the most significant change and effectively exempts these types of facilities from CON requirements.
- Raised the diagnostic center CON threshold from $1.5 million to $3 million. As previously, the threshold was calculated based on the higher of either the fair market value of the equipment or the cost.
- Increased the dollar threshold for replacement equipment from $2 million to $3 million. It added an annual inflation increase to the threshold.
- Created a new exemption for any licensed home care agency to provide early and periodic screening, diagnosis and treatment services to children up to 21 years old (in compliance with Medicaid requirements). The home care agency does not have to be Medicare-certified.
Effective Two Years After the First HASP-Directed Payment by the Department of Health and Human Services:
Under the Healthcare Access and Stabilization Program (HASP), North Carolina hospitals and health systems will receive up to $1.8 billion in federal dollars to improve access to care for Medicaid patients, provided that the program is approved by the Centers for Medicare & Medicaid Services. (Source: NCHA.org/hasp-resources.) The first HASP payments should begin later in 2023.
- Exempted “qualified urban ambulatory surgical facilities” from CON review. A qualified urban ambulatory surgical facility is any ambulatory surgical facility that: Is licensed to operate as an ambulatory surgical facility.Has a single specialty or multispecialty ambulatory surgical program.Is located in a county with a population greater than 125,000 according to the 2020 federal decennial census or any subsequent federal decennial census. Counties with populations greater than 125,000 according to the 2020 federal census included Wake, Mecklenburg, Guilford, Forsyth, Cumberland, Durham, Buncombe, Union, Gaston, Cabarrus, New Hanover, Johnston, Onslow, Iredell, Alamance, Davidson, Catawba, Orange, Rowan, Randolph, Brunswick and Harnett. Wayne (pop. 117,333), Robeson (pop. 116,530), Henderson (pop. 116,281) and Craven (pop. 100,720) are the next four counties with populations just under the 125,000 threshold. (Source: census.gov.)
- Is licensed to operate as an ambulatory surgical facility.
- Has a single specialty or multispecialty ambulatory surgical program.
- Is located in a county with a population greater than 125,000 according to the 2020 federal decennial census or any subsequent federal decennial census. Counties with populations greater than 125,000 according to the 2020 federal census included Wake, Mecklenburg, Guilford, Forsyth, Cumberland, Durham, Buncombe, Union, Gaston, Cabarrus, New Hanover, Johnston, Onslow, Iredell, Alamance, Davidson, Catawba, Orange, Rowan, Randolph, Brunswick and Harnett. Wayne (pop. 117,333), Robeson (pop. 116,530), Henderson (pop. 116,281) and Craven (pop. 100,720) are the next four counties with populations just under the 125,000 threshold. (Source: census.gov.)
- In return, qualified urban ambulatory surgical facilities must earn at least 4% of their revenue from self-pay and Medicaid patients, calculated as follows:
(Medicare allowable amount for self-pay and Medicaid surgical cases minus all revenue earned from self-pay and Medicaid cases) divided by total earned revenues for all surgical cases divided by total earned revenues for all surgical cases performed in the facility for procedures for which there is a Medicare allowable fee
Effective Three Years After the First HASP-Directed Payment by the Department of Health and Human Services:
- Effectively exempts magnetic resonance imaging (MRI) scanners in “urban” counties from CON requirements. Here, the law uses the same 125,000 population threshold as used for ambulatory surgical facilities to determine whether a county is “urban.” This means any facility or physician’s office in a county with more than 125,000 people will not be deemed a “diagnostic center” (and thus not subject to CON requirements) solely because it owns and operates an MRI.